Disgraced cryptocurrency executive Sam Bankman-Fried is expected to accept extradition to the United States, according to a person briefed on the matter, as he faces charges of orchestrating a years-long fraud that culminating last month with the collapse of its cryptocurrency exchange. . , FTX.
In the United States, Mr. Bankman-Fried, 30, has been accused of using his clients’ FTX deposits to make lavish real estate purchases, invest in other companies and donate funds to politicians. Mr. Bankman-Fried was arrested last Monday at his luxury apartment complex in the Bahamas. After spending the night in a police cell, a Bahamian judge denied him bail on Tuesday and he was transferred to the island’s notorious Fox Hill Prison.
Tuesday in court, Mr. Bankman-Fried said she would not waive her right to challenge extradition. But after a few days in jail, he is now leaning toward accepting extradition, though his decision could still change, according to the person briefed on the matter, who spoke on condition of anonymity to discuss legal deliberations sensitive He is expected to state his new position at a court hearing on Monday, the person said.
An extradition sets up what is likely to become a months-long legal drama in the United States. On Tuesday, prosecutors for the Justice Department’s Southern District of New York unsealed a 13-page criminal indictment charging Mr. Bankman-Fried on eight counts, including wire fraud against customers and lenders, as well as conspiracy to defraud the United States.
After moving to the United States, Mr. Bankman-Fried will be arraigned in federal court in Manhattan and will have a new bail hearing.
What you need to know about the FTX collapse
What is FTX? FTX is a failed company that was one of the largest cryptocurrency exchanges in the world. It allowed customers to trade digital currencies for other digital currencies or traditional money; it also had a native cryptocurrency known as FTT. The company, based in the Bahamas, built its business on risky business choices that are not legal in the United States.
After filing the charges, Mark Cohen, attorney for Mr. Bankman-Fried said her client was “reviewing the charges with his legal team and considering all of his legal options.”
The news that Mr. Bankman-Fried was expected to agree to extradition, Reuters first reported.
The collapse of FTX was an extraordinary fall for Mr. Bankman-Fried, a crypto celebrity who testified before Congress and spearheaded an effort to make the technology mainstream.
He founded FTX in Hong Kong, but moved the company to the Bahamas in late 2021, taking advantage of the country’s crypto-friendly regulatory stance. He also marketed the company aggressively in the United States: his face was plastered in ads and he rubbed shoulders with star actors and athletes, cultivating a reputation as a hard worker who intended to give his vast wealth to charity. For a while, he was thought to be the second richest crypto industry mogul.
While other crypto companies struggled this year, FTX was seen as a responsible company in a free and loosely regulated industry. That changed in early November, when a series of deposits revealed an $8 billion hole in the company’s accounts, forcing the stock to file for bankruptcy in November. 11. Its collapse has shaken the industry, sending crypto prices spiraling and forcing another big crypto company, lender BlockFi, to file for bankruptcy.
Mr. Bankman-Fried resigned on the day of FTX’s bankruptcy filing. He was replaced by John Jay Ray III, a lawyer specializing in the restructuring of troubled companies. In bankruptcy filings and congressional testimony, Mr. Ray has harshly criticized Mr. Bankman-Fried’s management, calling it a “total failure of corporate control.”
In the early 2000s, Mr. Ray oversaw the winding down of Enron, the energy trading company that collapsed in an accounting scandal. But he said in a court filing that the mess at FTX was the worst he had ever seen.
Having been denied bail in the Bahamas, Mr. Bankman-Fried has been held at the Fox Hill Correctional Center in Nassau, the nation’s capital, in a room with five other people.
Known locally as “Fox Hell”, the prison has been widely criticized for its harsh conditions. Running water inside the prison is scarce, beatings by guards are common and inmates sometimes defecate in buckets, according to former inmates, inmates’ relatives and a US State Department report.
The consequences of the fall of FTX
The sudden collapse of the crypto exchange has left the industry stunned.
A former Fox Hill inmate released last year, Sean Hall, said he was briefly incarcerated in maximum security, where he was crammed into a cell no wider than his wingspan with five other inmates. They slept on metal bunks without mattresses, he said, and woke up covered in bug bites.
“It is not a condition of life for any kind of living thing,” said Mr. Hall said.
Doan Cleare, the prison’s chief administrator, refused to allow a New York Times reporter and photographer into the prison compound. I would not give many details about Mr. Bankman-Fried’s state, except to say that the FTX founder was in the medical facility for reasons that could not be specified. He described the medical facility as a “dormitory-style apartment.”
“There is no preferential treatment,” said Mr. Cleare said, noting that the prison is being renovated to improve conditions.
Mr. Bankman-Fried’s parents, Stanford Law School professors Joe Bankman and Barbara Fried, visited the prison Thursday and left clothing and medicine, according to a person familiar with the matter.
They also deposited money with Mr. Bankman-Fried Commissioner’s Account Mr. Cleare said, but they were not allowed to see their son.
Royston Jones, Jr. and Amanda Holpuch contributed reporting.